Russia Offers Kyrgyzstan a Hand

Moscow’s proposal to bail out the ailing Kyrgyz economy is part of an assertive new approach in its former backyard.

Russia Offers Kyrgyzstan a Hand

Moscow’s proposal to bail out the ailing Kyrgyz economy is part of an assertive new approach in its former backyard.

Moscow may have been perturbed by the turbulence and regime change in Kyrgyzstan earlier this year, but all the signs now are that it is determined to put differences behind it and turn the changing political environment to its best advantage.

The emphasis is now firmly on economic ties, although some Kyrgyz analysts believe this is just a pretext for Moscow to fulfil its real aim of re-establishing its formerly dominant position in the country.

Kurmanbek Bakiev – who was elected president in July to replace Askar Akaev, a Russian ally whose ousting in March caused some consternation in Moscow - used his first foreign trip as Kyrgyz leader to build on an already growing relationship with the Kremlin.

President Vladimir Putin said Bakiev’s decision that Russia should be his first port of call was “in keeping with the spirit of strategic partnership”.

Central Asia security matters and Kyrgyzstan’s future foreign policy direction are clearly high on the Russians’ list of concerns.

Kyrgyzstan hosts a United States airbase as well as a Russian one, and Bakiev used his first press conference after being elected president to cast doubt on the future of the American base. Although he said later in July that the US military could stay at the Manas base for the time being, the new administration has shown that it is not as decisively pro-western as other revolutionary leaders in Ukraine and Georgia. Instead, it is likely to continue Akaev’s policy of engaging both Russia and the West, taking care not to slight either.

But during Bakiev’s visit it was the economic relationship, which remains crucial to Kyrgyzstan, that began to be hammered out.

The delegation that accompanied him met some of the key Russian business groups, all well connected with the Kremlin – Gazprom, Unified Energy Systems and Rusal, each a world-class player in the gas, electricity and aluminium industries, respectively. Discussions centred on Russian investment to complete work on new hydroelectric power stations, and the possible construction of an aluminium plant.

The most important tangible result of Bakiev’s trip was an agreement to restructure the small Central Asian republic’s debt to Russia. The acting finance minister Akylbek Japarov told journalists afterwards that the document covered the principal owed by Kyrgyzstan, which he said stood at 183 million US dollars as of 2003, and a supplementary accord on rescheduling the debt servicing.

“The Russians agreed to our proposal to restructure our debt over 33 years, with a seven-year period at preferential rates,” said Japarov. “We are writing off almost 50 per cent of the debt we owe Russia. Finance Minister Alexei Kudrin promised that later on we’d hold more talks on further reducing the debt burden.”

According to Japarov, President Putin promised to use the next G-8 summit to suggest that 100 per cent of the debt Kyrgyzstan owes other countries should be written off.

Kyrgyzstan’s high mountains give it plenty of scope to produce hydroelectricity at low cost, but it does not have the money to build more plants.

An anonymous source in the government told IWPR that if work on the half-built Kambarata-1 and -2 power stations were completed with Russian funding, it would result in excess electricity available for export, “We currently export an average of three billion kilowatt hours [a year], but if Kambarata-1 is put into operation, exports will triple. And we won’t just be exporting it to Kazakstan and Russia, but also to China and Pakistan. That naturally means additional revenues and more jobs for the country.

“But we won’t be able to build these stations through our own efforts, as they need investments of two billion dollars. Kyrgyzstan does not have such money, so it will be beneficial to undertake the project jointly with Russia.”

Some observers in Kyrgyzstan think that behind Russia’s offers of economic assistance lies a desire to recapture some of the political influence it has lost in Central Asia.

“Economics is a component of politics. If one has a strong economic influence, then the opportunity arises to influence politics to some degree,” said Kyrgyz member of parliament Marat Sultanov. “Over the last 12 years, Russia’s economic influence has almost been reduced to zero.”

Now Moscow wants to rebuild its economic ties with the region – but some fear the offer of help is far from disingenuous.

“Russia is not being honest with Kyrgyzstan,” said Dooronbek Sadyrbaev, also a member of parliament. “Their politicians regard Kyrgyzstan as a colony which needs to be kept in check, in this case economically. If they really viewed us as their brothers and friends, which is what they say in their speeches, they would long ago have written off the debt we inherited from Soviet times.”

For Sadyrbaev it is no surprise that the talks centred on hydropower, “They want to maintain their political influence and so they have decided to control [our] strategic energy industries. That means Kyrgyzstan will once again be the poor relative, the faithful dog, the absolute dependent.”

Sadyrbaev’s fellow member of parliament, Iskhak Masaliev, also believes economic and political interests go hand in hand for Russia, although he sees the Kyrgyz relationship with Moscow in more positive terms – not least because there are few other options.

“Historically, our country developed thanks to Russia. The economic influence of Russia is a positive thing,” he said. “We are going to be dependent on Russia, but then we cannot be independent – our country doesn’t possess the natural wealth for that.”

Political analyst Alexander Kulinsky says Kyrgyz leaders are proving responsive to economic stimuli. “Kyrgyzstan is adopting an increasingly pro-Russian vector in its foreign policy,” he said. “Whoever puts in the most capital – that will be the country’s orientation. So it’s quite understandable that Russia wants to bind the country to itself, because with economic leverage, it can expect Kyrgyzstan to be a firmer ally.”

For Kyrgyz officials, it is all about manoeuvring to gain the best position without upsetting the overall balance of foreign policy interests.

“The new leadership of Kyrgyzstan has taken a substantial step towards Russia. The issue of political and economic influence is always relevant and the two are undoubtedly connected,” said Alikbek Jekshenkulov, deputy head of the presidential administration. “When it makes such decisions, the leadership proceeds from national interests, trying to maintain a balance of political and economic interests.”

Part of the reason Russia is so interested in the Kyrgyz economy may have to do with a desire to expand its influence in the broader Central Asian region. Both Unified Energy Systems and Rusal – two of the firms now talking to the Kyrgyz – also have growing interests in Tajikistan, the other small republic in the region, which like Kyrgyzstan is a source of water for the whole region.

“The Russians have a major interest in the energy sector here [in Kyrgyzstan], because it is connected with the water and energy balance, by means of which there is an opportunity to exert some influence on Uzbekistan and Kazakstan," said Sultanov.

“Somewhere at the heart of this, Russia’s interest is in having influence over Uzbekistan and Kazakstan.”

Leila Saralaeva is an IWPR contributor.

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